LoopPay a way to challenge Apple
Samsung Electronics has acquired LoopPay, an American mobile magnetic payment technology start-up to compete against Apple in the mobile payment market.
Although the deal is expected to give Samsung a spot in the mobile payment market, analysts say the technology it’s buying lacks a competitive edge when compared to Apple Pay. Rumors of Samsung buying the Boston-based start-up have been going around since December.
The electronics giant said its purchase last Wednesday of a 100 percent stake in LoopPay is intended to complete its mobile payment ecosystem.
“Samsung Electronics has been making constant efforts to offer a safe and convenient mobile payment service,” said J.K. Shin, president of Samsung’s IT and mobile communication division. “Following the acquisition, we will speed up spearheading innovation in the field of global mobile commerce.”
The terms of the deal were not released.
LoopPay upgrades existing magnetic strip readers to receive payments from consumers’ mobile devices, including smartphones. An add-on attachment for phones allows the reader to recognize a signal from a mobile device as a magnetic swipe, as from a card.
Compared to Apple Pay or Google Wallet, LoopPay does not use NFC wireless technology. But it works with the majority of existing payment terminals, which could be welcomed by shop owners.
Unconfirmed rumors say Samsung will unveil a LoopPay-enabled Galaxy S6, a follow-up model to the Galaxy 6, at the Mobile World Congress Barcelona in March.
In Korea, its imminent usage is impossible, given that financial authorities have yet to endorse a technology that copies and transfers a magnetic signal for financial transactions.
Due to its security vulnerability, magnetic cards are soon to be entirely replaced by integrated circuit cards, a policy that is set to become another barrier for LoopPay, which may be renamed Samsung Pay.
Market researcher Gartner forecast earlier this month that mobile payments are expected to surge in coming years.
According to eMarketer, 25 percent of smartphones will be used for mobile payments by 2018. But a December survey by Wakefield Research for Verifone found that 50 percent of consumers polled were still unfamiliar with mobile payments - either Apple Pay or Google Wallet.
Analysts say there is still room for competition against Apple and Google.
Lee Seung-woo, an analyst with IBK Securities, says LoopPay may be a great technology for merchants but not necessarily for consumers.
“It is definitely an easy and convenient technology but when compared to Apple Pay, which relies on fingerprint scanning and NFC, it requires the launching of an app and the device touching the card payment terminal. It’s far from future-oriented,” he said in a Monday report.
He added that LoopPay will need to create a synergy with Samsung’s design improvements as well as NFC, semiconductor and mobile technologies.
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